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Fortune 500 Daily & Breaking Business NewsTue, 31 Mar 2015 20:47:19 +0000enhourly1http://wordpress.com/http://1.gravatar.com/blavatar/dab01945b542bffb69b4f700d7a35f8f?s=96&d=http%3A%2F%2Fs2.wp.com%2Fi%2Fbuttonw-com.png » Supreme Court - Fortunehttp://fortune.com
Fortunehttps://s0.wp.com/wp-content/themes/vip/fortune/assets/images/fortunelogo.pnghttp://fortune.com25040UPS loses Supreme Court pregnancy discrimination casehttp://fortune.com/2015/03/25/ups-pregnancy-discrimination/
http://fortune.com/2015/03/25/ups-pregnancy-discrimination/#commentsWed, 25 Mar 2015 18:36:41 +0000http://fortune.com/?p=1052516]]>In a move that bucks the reputation it has developed under Chief Justice John Roberts, the United States Supreme Court on Wednesday ruled 6-3 in favor of a working American in her case against a giant corporation.

The majority opinion--authored by Justice Stephen Breyer, who was joined by Justices Roberts, Ruth Ginsburg, Sonia Sotomayor, Elena Kagan, and Samuel Alito--found that Peggy Young, a former UPS truck driver, had the right to sue UPS for pregnancy discrimination after the shipping company refused to give her a less demanding shift when a medical professional ordered her to not lift heavy items while pregnant.

Katherine Kimpel, a lawyer at Sanford Heisler who specializes in gender and race discrimination and who filed an amicus brief in support of Young in the case, said the decision was a "win for working women and working mothers." The court ruled that it "was not going to insulate corporate interests from accountability," she said. Sam Bagenstos, the lawyer who argued Young's case before the Supreme Court, said in a statement that, with Wednesday’s ruling, “the Court recognized that employers can’t put pregnancy in a class by itself.”

UPS said in a statement that it’s confident that lower courts “will find that UPS did not discriminate against Ms. Young under [the Supreme Court’s] newly announced standard.”(The Supreme Court did not rule on the merits of Young's case; it bumped the case back down to the Fourth Circuit, which will rule on whether or not UPS engaged in discrimination.)

The case stems from a lawsuit filed by Young in October 2008 that accused UPS of violating the Pregnancy Discrimination Act. In 2002, Young took on a part-time role with UPS as a truck driver, picking up air shipments. Four years later, she took a leave of absence to receive in vitro fertilization. When she became pregnant and a midwife instructed her not to lift packages over 20 pounds, Young asked to return to UPS to do either light duty or her regular job as a truck driver, which seldom required her to lift heavy boxes. According to Young's Supreme Court petition, her manager told her that UPS offered light duty to workers who sustained on-the-job injuries, employees with ailments covered by the Americans With Disabilities Act, and those who had lost Department of Transportation certification because of physical aliments like sleep apnea; not--the manager said--to pregnant workers.

UPS wouldn't allow Young to return to her former role either since her lifting restriction made her a liability. Young was required to go on extended, unpaid leave, during which she lost her medical coverage. She returned to work as a driver about two months after her baby was born.

Young lost two previous rulings in her case against UPS. A district court decided in February 2011 that UPS's decision not to accommodate Young was "gender-neutral.” The Fourth Circuit Court of Appeals later affirmed that decision, ruling UPS had established a "pregnancy-blind policy."

In October, UPS changed its policy for pregnant workers. This year, it started offering temporary light duty to pregnant workers who need it. Despite the reversal, UPS maintains that its denial of Young's light duty request was lawful at the time and that its policy change is voluntary and not required by the Pregnancy Discrimination Act. The Chamber of Commerce filed an amicus brief supporting UPS, calling attention to companies that offer pregnant employees "more than what federal law compels them to provide."

The Supreme Court likely took up Young's case because it raises the larger question of how to interpret the Pregnancy Discrimination Act of 1978. One portion of the statute has been especially troublesome: a line that says employers must treat pregnant women the same as "other persons not so affected [by pregnancy] but similar in their ability or inability to work."

Young’s legal team has argued that the statute means that as long as an employer accommodates a subset of workers with disabilities, pregnant workers who are similarly unable to work must receive the same treatment.

UPS, meanwhile, has gone with the interpretation that so long as a policy is pregnancy-neutral--which often means considering pregnancy the same way they would an off-the-job injury that garners no special treatment--an employer is safe from discrimination claims.

In his opinion, Justice Breyer didn't agree entirely with either side. "We doubt that Congress intended to grant pregnant workers an unconditional most-favored-nation status." At the same time, he wrote, "UPS says that the second clause [of the Act] simply defines sex discrimination to include pregnancy discrimination. But that cannot be so."

The court did not issue a rigid rule that will dictate when an employer must make accommodations for a pregnant worker. Instead, Justice Breyer left a bit of wiggle room. He wrote, in essence, that if an employer is going to not accommodate a pregnant woman while accommodating other employees "similar in their ability or inability to work," the employer must have a "legitimate, non-discriminatory reason" for doing so.

In their dissent, Justices Antonin Scalia, Anthony Kennedy, and Clarence Thomas said the justices in the majority went beyond the intent of the Pregnancy Discrimination Act and imposed new requirements on employers.

Pregnancy discrimination cases are on the rise. In fiscal year 2013, 5,342 pregnancy discrimination charges were filed with the Equal Employment Opportunity Commissions and state and local Fair Employment Practices agencies, up from 3,900 in 1997.

While Wednesday's ruling wasn't as big of a win for employees as it could have been, it did set somewhat more stringent guidelines for how employers must treat pregnant workers. "If employers accommodate other people [with similar physical limitations] and not pregnant employees, there better be a really good explanation for that," Kimpel says.

U.S. stock futures are little changed this morning after yesterday’s market decline, the biggest in two weeks. European shares are also flat in mid-day trading, while Asian markets closed with slight gains.

Here’s what else you need to know today.

1. Meet the new Kraft Heinz Company.

Kraft Foods Group KRFTwill merge with ketchup maker H.J. Heinz after Brazilian private-equity firm 3G Capital teamed up with Warren Buffett’s Berkshire Hathaway to purchase the maker of packaged foods such as Philadelphia Cream Cheese and Velveeta. Kraft’s shareholders will receive 49% of shares in the combined company, plus a special cash dividend of $16.50 a share, the companies said. Berkshire and 3G will also invest another $10 billion in the combined company. Kraft has recently faced sluggish growth in the U.S., its main market, as consumers turn to natural and organic ingredients. Its also had to contend with a massive recall of its namesake Macaroni and Cheese and a shakeup in its top leadership in recent months.

2. Facebook hosts its annual F8 developers conference.

The social networking giant kicks off its annual conference in San Francisco today and is expected to unveil new ways for developers to work with its products. Many are anticipating new initiatives for Facebook’s Messenger communication app and its Instagram photo sharing platform. CEO Mark Zuckerberg will take the stage at 10 a.m. PT to deliver a keynote address. The F8 annual meeting has traditionally focused on consumer-facing initiatives, but in recent years Facebook FB has shifted its focus to developers as it finds better ways to help app creators interact with the social network’s nearly 900 million users.

3. Hong Kong-based Hutchison Whampoa buys Britain’s O2.

Hutchison Whampoa, owned by billionaire Li Ka-shing, Asia’s second-rich man, agreed to buy the wireless network O2 from Spain’s Telefonica for 10.25 million pounds ($15.3 billion). The purchase will create Britain’s biggest wireless provider by customers. Hutchison had been in exclusive talks with the company for nearly two months and will merge the O2 with its Three business. Li has been working to diversify Hutchison’s portfolio and find ways to insulate the retail-to-ports group’s sales from the ups and downs of economic cycles.

4. Clean air regulations hang in the balance.

Clean air regulations put in place by President Obama are being challenged in the nation’s highest court, where arguments for the case will be heard today. Opponents say new regulations that control levels of mercury and other airborne pollutants would cost businesses billions of dollars to implement and that wasn’t taken into consideration by the Environmental Protection Agency as it should have. According to the Clean Air Act, the EPA was given power to regulate electric utilities as it was deemed “appropriate and necessary.” Opponents believe that “appropriate” should include cost estimates, though the agency made the decision without regard for expense.

5. Happy 5th birthday, Obamacare.

The Affordable Care Act was signed into law by President Obama five years ago this week, and the president is making the rounds today speaking at a meeting public and private health care providers and meeting with the health and human services secretary. Since its approval, the act has expanded insurance access to more than 16 million new people, according to government tallies. That includes 14 million adults that gained coverage either through the exchanges established by the ACA or via expanded access to Medicaid. Another 2 million young adults under age 26 gained coverage because of a provision that allows them to remain on their parents’ plan.

]]>http://fortune.com/2015/03/25/kraft-heinz-facebook-f8-conference-5-things/feed/0lorenzettifortuneRoberts, Obamacare’s savior in 2012, seems inscrutable this timehttp://fortune.com/2015/03/04/roberts-obamacares-savior-in-2012-seems-inscrutable-this-time/
http://fortune.com/2015/03/04/roberts-obamacares-savior-in-2012-seems-inscrutable-this-time/#commentsWed, 04 Mar 2015 22:59:16 +0000http://fortune.com/?p=1017710]]>(REUTERS) — U.S. Chief Justice John Roberts, who cast the decisive vote in 2012 to beat back the first major challenge to President Barack Obama’s healthcare law, kept his cards close on Wednesday.

And the man who occupies the center chair on the Supreme Court’s mahogany bench and often dominates arguments seemed to remain deliberately inscrutable.

Roberts asked few questions, none revealing his view of the challenge to the crucial tax-credit subsidies that help low- and moderate-income people buy insurance under the 2010 law. His first question came late in the arguments of the challengers’ lawyer and was, in fact, more of a joke.

As liberal justices pounded Michael Carvin for altering his stance on the necessity of the tax-credit subsidies to Obamacare from his view in the failed 2012 court challenge, Roberts remarked, “Mr. Carvin, we’ve heard talk about that other case. Did you win that other case?”

As spectators began to laugh, Roberts said, “So maybe it makes sense that you have a different story today.”

Carvin, at the time representing a small-business group, lost when Roberts joined the court’s four liberals to uphold Obamacare.

On Wednesday, Carvin argued on behalf of Virginians enlisted as plaintiffs by a libertarian group opposed to Obama’s signature domestic policy achievement.

In 2012, Roberts, a shrewd 60-year-old former corporate lawyer appointed by Republican President George W. Bush, drew the condemnation of fellow conservative justices and much of the right-wing legal community for preserving Obamacare.

Roberts never responded publicly to conservatives’ claims he was a traitor or to liberals’ praise of him as a savior. His few words on Wednesday suggested he knows he is being watched as the possible pivotal vote again.

One clue to Roberts’ thinking might have emerged near the end of the 85-minute oral argument when U.S. Solicitor General Donald Verrilli said the court regularly defers to Internal Revenue Service interpretation of tax laws.

Here, the IRS has said the tax-credit subsidies should be given to people who buy insurance on federally run as well as state exchanges.

“If you’re right,” Roberts said, “that would indicate that a subsequent administration could change that interpretation.”

Verrilli said the next administration would “need a very strong case” to make a switch.

Roberts may be suggesting he is open to ruling for the government while ensuring Obama’s successor in the White House an opportunity to reinterpret the law.

His fellow justices will get the first glimpse of Roberts’ views on Friday when they privately take their customary preliminary vote on the week’s cases. The vote always starts with him.

]]>http://fortune.com/2015/03/04/roberts-obamacares-savior-in-2012-seems-inscrutable-this-time/feed/0Image (2) john_roberts_jr2.jpg for post 306938huddlestontomThe Supreme Court’s decision on health care subsidies — what you need to knowhttp://fortune.com/2015/03/03/supreme-court-obamacare/
http://fortune.com/2015/03/03/supreme-court-obamacare/#commentsTue, 03 Mar 2015 19:20:36 +0000http://fortune.com/?p=1012266]]>The Supreme Court is set to hear arguments Wednesday in a case that could derail the Affordable Care Act (ACA), commonly referred to as Obamacare, and potentially increase the cost of insurance for millions across the U.S. It’s a big deal, and it has insurance companies, medical providers and everyday workers holding their breath.

Here’s what you need to know about King v. Burwell before the case kicks off in the nation’s top court.

What’s the case about?

In short, it’s about the legality of insurance subsidies provided by the federal government under the ACA to only those people enrolled through federal exchanges (i.e. Healthcare.gov).

The ACA established exchanges where individuals and small businesses could buy coverage. The intention was for the states to do this on their own, but 34 states chose not to. Therefore, the federal government stepped in and launched Healthcare.gov for anyone in those particular states who wanted to shop for coverage.

The exchanges are where the subsidies come into play: the government allows for a subsidy for anyone registered through an exchange who cannot financially handle the full cost of a healthcare plan. According to the government’s interpretation of the ACA, the subsidy is available to anyone who buys insurance through any exchange, whether it was established by the federal government or a state.

The King prosecution disagree. The ACA bill states the subsidies apply to “an Exchange established by the State,” and therefore the challengers allege that anyone who purchased coverage through a federal exchange is not eligible for a subsidy. Subsidies would only apply to those who bought coverage through a state-run exchange.

What’s at stake?

If the Supreme Court rules in favor of King, it would end up leaving millions without insurance because they would not longer be able to afford the premiums, or the deductible. Last year, over 5 million people bought insurance on federal exchanges and about 87% of them qualified for subsidies. If those people opt out of buying insurance, it could end up making everyone’s healthcare a lot more expensive in the affected states.

What could happen if the subsidies are struck down?

The worst case scenario? A “death spiral” of rising insurance costs for everyone in the 34 states where federal subsidies would no longer apply, according to Simon Lazarus, senior counsel to the Constitutional Accountability Center.

Here’s how the death spiral could work: If healthy people opt out of insurance coverage because it’s not worth the price (which would be the case without subsidies for many low- and middle-income Americans), the population buying into the system would be weighted toward relatively sick people who value the coverage even at higher prices. In order to be able to afford these clients, insurance companies will raise premiums, which in turn causes more people to leave the market. The cycle would repeat itself, spiraling until insurance rates are unwieldy, even to the point where insurers leave the individual market altogether.

“People who don’t have group health policies will see premium rates skyrocket. So, many of them will decide not to hold policies.” said Lazarus. “This ‘death spiral’ happened in the 1990s, and it’s what the ACA was designed to avoid.”

In the 1990s a handful of states implemented laws that made insurers cover everyone, despite their health status, and offered no subsidies. The result was that insurance premiums skyrocketed and the number of people opting into the insurance pool went down. Sicker people continued to buy insurance even as prices grew, and more and more healthy people fled. Insurance companies abandoned the individual market in some of these states because it became financially unfeasible, and in the states where they remained, prices stayed very high.

If the subsidies disappear and a number of low-income, relatively healthy people opt out of insurance coverage, that could destabilize the market for everyone in those states. An economic forecast by the RAND Corporation estimates that prices could rise by as much as 47% and enrollment in the individual market would fall by about 70%. That means about 8 million people in the 34 affected states could become uninsured if the subsidies disappear.

Would that mean the end of Obamacare?

Not totally. The expansion of Medicaid will remain in place for all individuals who earn up to 138% of the federal poverty level, and states that established their own exchanges will not be affected. However, across more than half the U.S., the ACA will essentially be gutted.

“One thing that you’ll get is an even sharper and sadder gap in the quality of health care between relatively blue [liberal] and relatively red [conservative] states,” said Lazarus.

There are three key components of the ACA. First, the insurance reforms, which guarantee universal access to insurance despite any pre-existing conditions. Second, there is the individual mandate, which ensures there is a balanced pool of healthy and unwell subscribers. Third, there are the tax credits and subsidies that ensure everyone can afford coverage.

“Remove one leg and the whole thing falls apart,” Lazarus explained.

A ruling against the government would make the individual mandate moot in many cases, since it can be waived if a person cannot find affordable insurance, which is especially likely if the “death spiral” takes place. This could all add up to a 1990s-style implosion for states that don’t have their own exchanges pending the Supreme Court’s final decision come June.

U.S. stock futures are little changed this morning after the S&P 500 closed at a record yesterday, and the tech-heavy Nasdaq index finished up nearly 5% on the year as it climbs to levels not seen since the Internet bubble burst 15 years ago. European markets are slightly lower in trading today, while Asian shares ended mostly up.

Earnings in focus today include reports from Target TGT and Salesforce CRM, which reports after the market closes.

Here’s what else you need to know about today.

1. Yellen, day two.

Federal Reserve Chairman Janet Yellen goes before the House Financial Services Committee today following her testimony in the Senate yesterday. She said that the Fed would signal any upcoming changes in interest rates, which are being considered on a “meeting-by-meeting basis.” A rate hike could come as soon as June, although investors expect it to come later in the year given Yellen’s sentiment. Yellen also came prepared to oppose the current “Audit the Fed” legislation proposed by Republican Senator Rand Paul -- a move that’s about power not transparency, explains Fortune’s Chris Matthews.

2. Abercrombie & Fitch case heads to the Supreme Court.

The U.S. top court will hear arguments today concerning workplace discrimination by Abercrombie & Fitch ANF when it refused to hire a Muslim applicant who was wearing a head scarf during the interview. The teen clothing retailer said the hijab didn’t comply with the company’s dress code. The Supreme Court will decide if Abercrombie’s action was legal, as well as answer questions about who is responsible for addressing conflicts between an employee’s religious practices and a company’s policies.

3. Apple found guilty in patent case.

A Texas court said Apple must shell out $532.9 million after a federal jury found the tech giant guilty of patent infringement. The jury agreed that Apple AAPL had illegally used three patents owned by Smartflash in its iTunes software. Smartflush, a company based in Texas, doesn’t make any products itself but considers itself a patent licensing company. Apple balked at the decision and promised “to take this fight up through the court system,” according to a company press release.

4. HSBC goes to Parliament.

HSBC HSBC has faced a rough few weeks. First, it was revealed that the bank is sheltering tax-free accounts of arms dealers and politicians in its Swiss branch. Then, the CEO’s own tax affairs came under scrutiny when it came out that his bonus was moved between Switzerland and Panama to avoid detection. Now, two top HSBC executives will face a grilling by UK lawmakers over allegations that the bank helped clients evade taxes. Lawmakers want to know how extensive the problem may be and what the bank is doing to curb the issue.

5. China manufacturing improves.

China’s manufacturing sector unexpectedly improved in February after a dismal four-month streak. The HSBC Purchasing Managers’ Index rose to 50.1 from January’s 49.7, any result above the 50-mark indicates expansion and anything below that number means manufacturing is contracting. This is the first time in four months that China’s manufacturing expanded. That’s better, but there’s still worrying underlying data. Factory employment fell for the 16th straight month and both input and output prices declined. Domestic growth is likely to remain muted as the central bank seeks to spur growth with further stimulus.

With these 11 words, the Court dismissed, without oral arguments, the appeal of two Minneapolis men, Richard John Baker and James Michael McConnell, who argued that a clerk's refusal to issue them a marriage license violated their federal constitutional rights. (Source: Courting Justice, Gay Men and Lesbians v. The Supreme Court, by Joyce Murdoch and Deb Price.)

In preparing for Bowers v. Hardwick, a landmark case challenging the constitutionality of a Georgia law criminalizing homosexual sodomy, Powell, then 78, made this observation to one of his law clerks, Carter Cabell Chinnis, Jr. Chinnis didn't tell Powell that Chinnis was himself gay, as he knew many of Powell’s previous clerks had been, but wondered if Powell suspected it. Powell looked for a compromise position in the case, but couldn't find one, and voted in the end to uphold the felony statute. [Sources: Justice Lewis F. Powell, Jr., by John Calvin Jeffries, Jr., and Courting Justice (above).]

In joining the majority opinion, upholding Georgia’s law criminalizing homosexual sodomy, Chief Justice Burger’s added: "Decisions of individuals relating to homosexual conduct have been subject to state intervention throughout the history of Western civilization. Homosexual sodomy was a capital crime under Roman law. ... [Eighteenth century English jurist Sir William] Blackstone described ‘the infamous crime against nature’ as an offense of ‘deeper malignity’ than rape, a heinous act ‘the very mention of which is a disgrace to human nature,’ and ‘a crime not fit to be named.'”

Justice Kennedy wrote the opinion of the Court for a 6-3 majority. After several cities and villages in Colorado had passed ordinances banning discrimination based on sexual orientation, Colorado voters passed, by referendum, a state constitutional amendment banning and invalidating those ordinances. In Romer, the Court struck down that referendum, marking its first important turn toward protecting gay rights.

Scalia’s argument continued: “Of course it is our moral heritage that one should not hate any human being or class of human beings. But I had thought that one could consider certain conduct reprehensible–murder, for example, or polygamy, or cruelty to animals–and could exhibit even ‘animus’ toward such conduct. Surely that is the only sort of ‘animus’ at issue here: moral disapproval of homosexual conduct, the same sort of moral disapproval that produced the centuries-old criminal laws that we held constitutional in Bowers.”

Tyron Garner (left) and John Lawrence (right)Photo by Reuters

7. "The petitioners are entitled to respect for their private lives. The State cannot demean their existence or control their destiny by making their private sexual conduct a crime.”

In this landmark ruling, the Court, 6-3, overruled Bowers v. Hardwick, and struck down the Texas law criminalizing homosexual sodomy. Kennedy continued: "[A]dults may choose to enter upon this relationship in the confines of their homes and their own private lives and still retain their dignity as free persons. When sexuality finds overt expression in intimate conduct with another person, the conduct can be but one element in a personal bond that is more enduring. The liberty protected by the Constitution allows homosexual persons the right to make this choice."

8. "Today’s opinion dismantles the structure of constitutional law that has permitted a distinction to be made between heterosexual and homosexual unions, insofar as formal recognition in marriage is concerned."

Though Scalia obviously sought to chide the majority for what he regarded as poor reasoning, many lower-court judges later cited his dissent as proof that the logic of Lawrence now required according constitutional protection to same-sex marriage. Scalia had also written: "If moral disapprobation of homosexual conduct is 'no legitimate state interest' . . . what justification could there possibly be for denying the benefits of marriage to homosexual couples exercising '[t]he liberty protected by the Constitution'?"

Justice Kennedy wrote this opinion for the 5-4 majority, striking down a key provision of the federal Defense of Marriage Act (DOMA), which had forbidden same-sex couples, even when lawfully married under state law, from being treated as "spouses" under federal law.

“DOMA's principal effect is to identify a subset of state-sanctioned marriages and make them unequal,” Kennedy wrote. “The differentiation demeans the couple, whose moral and sexual choices the Constitution protects … and whose relationship the State has sought to dignify. And it humiliates tens of thousands of children now being raised by same-sex couples.”

10. "By formally declaring anyone opposed to same-sex marriage an enemy of human decency, the majority arms well every challenger to a state law restricting marriage to its traditional definition."

–Justice Scalia, dissenting in United States v. Windsor, June 26, 2013.

In his apoplectic dissent, Justice Scalia once again seemed to unwittingly play into the hands of those who favored a constitutional right to same-sex marriage. “The real rationale of today's opinion,” Scalia wrote, “whatever disappearing trail of its legalistic argle-bargle one chooses to follow, is that DOMA is motivated by 'bare … desire to harm’ couples in same-sex marriages. ... How easy it is, indeed how inevitable, to reach the same conclusion with regard to state laws denying same-sex couples marital status.”

Two months ago, writing for a 2-1 majority, Judge Sutton, of the U.S. Court of Appeals for the Sixth Circuit, upheld same-sex marriage bans in four cases arising from Michigan, Ohio, Tennessee and Kentucky. He said his hands were tied by the Supreme Court's one-line 1972 dismissal in Baker v. Nelson (see point 1, above). Since four other U.S. Courts of Appeals had by then ruled that there was a constitutional right to same-sex marriage--and 36 states by this point permitted such marriages--Judge Sutton's ruling created a "circuit split," which frequently triggers U.S. Supreme Court review.

In dissent, circuit judge Martha Craig Daughtrey wrote: "If ever there was a legal ‘dead letter’ emanating from the Supreme Court, Baker v. Nelson ... is a prime candidate. It lacks only a stake through its heart."

Valeria Tanco (left), and Sophy Jesty pose with their baby girl, Emilia, at their home in Knoxville, Tenn.Photo by Wade Payne--Reuters

12. "The petitions ... are granted [for] the following questions: 1) Does the Fourteenth Amendment require a state to license a marriage between two people of the same sex? . . ."

Using standard, understated, formulaic language, the Court agreed on Friday to decide the issue Jack Baker and Mike McConnell tried to bring before it in 1972: Do same-sex couples have a constitutional right to get married? The issue will be argued in late April, and the historic answer handed down in late June.

]]>http://fortune.com/2015/01/18/same-sex-marriage-supreme-court/feed/0us supreme courtrparloff2013Jack BakerSupreme Court Justice Lewis Powell testifying before Sen ApByron R. WhiteWarren E. BurgerAnthony M. KennedyAntonin Scalia;Ruth Bader GinsburgGAYS CELEBRATE LANDMARK CASE.Edith "Edie" Windsor reacts to cheers as she arrives for a news conference following the U.S. Supreme Court 5-4 ruling striking down as unconstitutional the Defense of Marriage Act, in New YorkNominees for Federal Appeals Judge posts across thValeria Tanco and Sophy Jesty pose with their new baby girl in KnoxvilleBP’s settlement saga by the numbershttp://fortune.com/2014/12/08/bps-settlement-saga-by-the-numbers/
http://fortune.com/2014/12/08/bps-settlement-saga-by-the-numbers/#commentsMon, 08 Dec 2014 21:55:37 +0000http://fortune.com/?p=895860]]>The U.S. Supreme Court has rejected BP’s challenge to a multi-billion settlement it reached related to the 2010 Gulf of Mexico oil spill, the largest in U.S. history.

The oil giant had appealed the settlement, claiming that it let businesses collect despite being unable to prove their damages were linked to the spill. The company had lost previous appeals in lower courts.

The decision Monday marks a major setback for BP, which wanted to reduce amount of damages it would pay. Plaintiffs accused the company of merely trying to nullify a settlement it had already agreed to.

Here are 10 important numbers to know about the settlement and the company’s legal challenge.

4.25: The amount of dollars in billions BP is expected to pay in claims to businesses and individuals affected by the oil spill, according to Bloomberg, and from statistics gathered by Patrick Juneau, the administrator in charge of handling the claims. So far, the company has paid about $2.3 billion.

5: The number of U.S. states affected by the spill, including Louisiana, Texas, Mississippi, Alabama and Florida.

11: The number of lives lost as a result of the oil spill. Thousands of animals were killed too.

An exhausted oil-covered brown pelican sits in a pool of oil in Louisiana on June 5, 2010.Photograph by Sean Gardner -- Reuters

43: The number in billions that BP has set aside to resolve claims related to the spill. BP already settled U.S. criminal charges and agreed to pay $4.5 billion in fines related to that. In January, BP will go on trial for penalties associated with the U.S. Clean Water Act. It could pay as much as $18 billion for that, according to Reuters.

67: The percentage of the spill that BP was found to be at fault for, according to U.S. District Judge Carl Barbier. Transocean RIG was found to be responsible for 30% and Halliburton just 3% HAL, according to Bloomberg.

87: The number of days that passed before the well was capped in September 2010.

121: BP's market capitalization as of 4pm EST. Shares of the company were trading over 2.7% lower for the day after the court's decision was announced.

200: The gallons of oil spilled in millions. That's also measured in 4.9 million barrels of oil, according to the Smithsonian.

2010: The year the Deepwater Horizon drilling rig exploded which prompted the spill. The day was April 20.

2014: The year when a U.S. District court found that BP was responsible for the spill due to gross negligence and misconduct. The judge made the ruling in September.

]]>http://fortune.com/2014/12/08/bps-settlement-saga-by-the-numbers/feed/0BP logo 2013snyderfortuneAn exhausted oil-covered brown pelican sits in a pool of oil along Queen Bess Island Pelican RookeryAereo, a live-stream TV startup, files for bankruptcyhttp://fortune.com/2014/11/21/aereo-files-for-bankruptcy/
http://fortune.com/2014/11/21/aereo-files-for-bankruptcy/#commentsFri, 21 Nov 2014 12:41:50 +0000http://fortune.com/?p=876685]]>Aereo, a startup that allowed users to live-stream television shows, on Friday announced that it had filed for bankruptcy, nearly five months after the Supreme Court ruled against the company in a copyright spat with TV networks.

“Chapter 11 will permit Aereo to maximize the value of its business and assets without the extensive cost and distraction of defending drawn out litigation in several courts,” wrote Aereo CEO and founder Chet Kanojia in a blog post on the company’s website. That statement indicated the startup doesn’t intend to fight to keep its service in the market.

Aereo lost a key Supreme Court case in late June, in a 6-3 ruling that found the company’s retransmission of network programming amounted to a “public performance” and therefore must include payments to the broadcast networks, or Aereo would run afoul of copyright laws. After that ruling, Fortune reported that the ruling could have killed off the startup, which had raised nearly $100 million from venture capital firms and Barry Diller’s IAC/Interactive IACI.

Kanojia at times struck a hopeful tone in his blog post, saying he felt the current television experience provided few options and that costs were “unreasonably high and rising.” He said Aereo had intended to provide an alternative to “how they watch local live TV. That’s how Aereo came to live.” Founded in 2012, the company allowed users to stream and even digitally record live broadcast television provided they pay for the service for between $8 to $12 a month, depending on the plan.

The startup faced a legal challenge by the major TV networks, which sued Aereo in federal court in New York, citing copyright infringement and asking the court to close the startup down.

After winning a few lower court decisions, Aereo faced a loss at the Supreme Court in June, a defeat Kanojia said “has proven difficult to overcome.”

]]>http://fortune.com/2014/11/21/aereo-files-for-bankruptcy/feed/0Supreme Court Hears Case Pinning Startup Internet TV Company Aereo Against Major Broadcast NetworksjohnnerkellSupreme Court’s new Obamacare case could be the next Bush v. Gorehttp://fortune.com/2014/11/10/supreme-courts-new-obamacare-case/
http://fortune.com/2014/11/10/supreme-courts-new-obamacare-case/#commentsMon, 10 Nov 2014 12:00:51 +0000http://fortune.com/?p=857463]]>Make no mistake: With the Supreme Court's decision Friday to hear the latest legal challenge to the Affordable Care Act, that law--the most significant social legislation in a generation and the signature achievement of the Obama presidency--hangs by a thread.

If the Court rules for the challengers--nullifying the guts of the statute's benefits in 34 states and sending participating insurers into an actuarial death-spiral--it will have rendered its most divisive ruling since Bush v. Gore.

Whatever it does, the outcome will define Chief Justice John Roberts Jr.'s legacy more than any case since he ascended the bench nine years ago.

That the Court reached out to take the case, King v. Burwell, even though there was no current split over the issue in the federal courts of appeals, suggests that at least four justices already strongly believe that the U.S. Court of Appeals for the Fourth Circuit, which rejected the challengers' argument, came out the wrong way. (To grant review, four of the nine justices must vote to hear it.)

Most observers assume that those four are the same ones who voted to strike the law down three terms ago, in June 2012, on the grounds that it exceeded Congress's powers to enact: Antonin Scalia, Anthony Kennedy, Clarence Thomas, and Samuel Alito.

The law squeaked by that time when the Chief Justice unexpectedly joined the four more liberal justices in upholding it. Most observers therefore expect the Chief Justice to be the decisive vote here again. Arguments will likely be heard in March 2015, according to Lyle Denniston of Scotusblog, and a decision should come down by the end of June.

King v. Burwell is not a constitutional case. Instead, it turns on statutory construction--that is, how to interpret the words of a statute. It stems from an anomaly in the law.

The anomaly relates to computation of the tax subsidies that are used to offset the cost of insurance premiums for low and middle-income people. These subsidies are the heart of the law. They are what renders the care afforded by the Affordable Care Act affordable. But the problematic language, if interpreted robotically, strips the vast majority of the law's presumed beneficiaries of those crucial subsidies.

Here's how. The law contemplates that its beneficiaries--low and middle-income people who aren't insured through their employers and make too much money to be eligible for Medicaid--will obtain their coverage from health insurance marketplaces called exchanges. One provision of the law mandates that every state must set up such an exchange. But a later section contradicts the first, saying that states don't really have to. Instead, they can elect not to set one up, in which case federal officials at the Department of Health and Human Services "shall . . . establish and operate such Exchange within the State."

Those who support the law as it's been interpreted up to now--Democrats, basically--say it's obvious that this later section means that these federally created exchanges then stand in the shoes of the state-established exchanges for all purposes.

And everyone would have to agree were it not for a problem deep within the bowels of the subprovisions defining how to compute the tax credits that health plan enrollees are entitled to under the law. (These tax credits are "advanced" to the taxpayer and then paid directly by the government to the health insurer, so the enrollee experiences them only in the form of lower premiums.)

The amount of the tax credit, the law says, is to be based on something called the "premium assistance credit amount," and that, in turn, is based on the number of "coverage months" the taxpayer incurred that year, and a "coverage month," finally, is defined as a month that the taxpayer spent enrolled in a health plan "through an Exchange established by the State." (Emphasis added.)

Do you see the problem? Taken literally, the four italicized words seem to mean that there's actually no tax credit available at all for anyone enrolled in a plan obtained through an exchange set up by the federal government, because that's not an Exchange "established by the State"! And since 34 (mainly red) states declined to set up their own exchanges, most of the millions of people that everyone had assumed would be the law's beneficiaries are actually ineligible for the tax credit that was supposed to make their care affordable.

The impact of a robotic interpretation of these four surprisingly momentous words doesn't stop there. Rather, the dominos keep toppling until every major goal of the law has been thwarted. Because no one would be eligible anymore for tax subsidies in the 34 states, most of those people would also (under an exemption based on affordability) no longer be subject to the so-called individual mandate which requires them to enroll in a health plan. This means that insurers participating in those states--who would still be subject to the law's prohibitions against denying coverage to people with pre-existing conditions and so on--would now be sitting ducks for what health care economists call "adverse-selection death spiral," which is what happens when too many sick people are enrolling vis-a-vis healthy people and an insurer can’t make ends meet. That will lead insurers to pull out of the program. On top of that, most employer mandates in those 34 states would also self-annihilate, since they, it turns out, are contingent upon the employer's employees being eligible for the tax subsidies.

The most amazing thing about this four-word time-bomb that now threatens to blow apart Obamacare is that no one seems to have noticed it prior to the law's passage. No legislator, no analyst, no reporter. Every estimate of the law's impact and costs--including one performed by the Congressional Budget Office in November 2009--assumed no distinction in benefits afforded by state- and federally-run exchanges.

The significance of the anomaly appears to have been recognized for the first time several months after the law passed when a Greenville, S.C., employee benefits attorney named Thomas Christina stumbled across it. He gave a speech about it in December 2010 to the American Enterprise Institute, and, thereafter, a small group of anti-Obamacare zealots nursed the anomaly into a fresh legal assault, comprising four lawsuits including King.

The suits formally take aim at a May 2012 ruling by the Internal Revenue Service, in which the agency said it would grant tax credits to enrollees regardless of whether they got their insurance from a state- or federally-established exchange. (In one of the other suits challenging this IRS rule, Halbig v. Burwell, the D.C. Circuit Court of Appeals ruled 2-1 in favor of the challengers last July, though the panel's decision was later vacated so that the full D.C. Circuit could rehear the case.)

Why in the world would Congress have wanted to blow apart the very statutory scheme it was enacting? Well, under one approach to statutory construction--an exceedingly rigid one--a judge might answer: It doesn't matter. The law is unambiguous, so I have to apply it as written. It's up to Congress to fix it.

Another school of statutory interpretation would want at least some evidence from the structure of the law that there was some rational purpose for the seemingly self-destructive language. The law's challengers have floated the theory that perhaps Congress wanted to incentivize the states to enact their own exchanges by threatening to deny their citizens tax benefits if they didn't. Congress merely failed to anticipate that so many states would refuse to set up their own exchanges notwithstanding the threat, the challengers suggest, which is why the whole statutory scheme is now poised to crumble.

The problem with the challengers' "incentive" theory is that there is virtually no shred of contemporaneous evidence supporting it--and what good is a threat if no one knows you're making it? The closest thing to any corroboration is a couple off-the-cuff remarks made by health care consultant Jonathan Gruber two years after the law passed.

Gruber, who had been a consultant to Congress and the Administration during the drafting of the law, has since said that his remarks were mistaken, and he doesn't remember exactly what he meant by them. "I might have been thinking," he told The New Republic last July, "that if the federal backstop wasn’t ready by 2014, and states hadn’t set up their own exchange, there was a risk that citizens couldn’t get the tax credits right away. … There are few people who worked as closely with Obama administration and Congress as I did, and at no point was it ever even implied that there'd be differential tax credits based on whether the states set up their own exchange. And that was the basis of all the modeling I did, and that was the basis of any sensible analysis of this law that's been done by any expert, left and right."

Drafting errors, contradictions, and ambiguous provisions are not unusual in statutes, particularly long and complex ones, and judges have, as a consequence, developed whole schools of analysis for coping with them. But almost all of them agree that an effort should be made to avoid interpreting a law in a way that would be absurd. The Supreme Court has often said that it is a "fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme." (In this Scotusblog post, Yale Law School professor Abbe Gluck analyzes how she believes textualists, like Justice Scalia, might have been expected to rule in this case, were it not so politically freighted.)

So far, judges appointed by Republican presidents reviewing these facts have decided that their hands are tied, that the four words are unambiguous, and that they must therefore be interpreted robotically--whatever the consequences. Though such a ruling would effectively nullify an Act of Congress, these judges assert that their position is, properly understood, a humble expression of their subservience to Congress. As Judge Thomas B. Griffith of the D.C. Circuit wrote in Halbig, "Within constitutional limits, Congress is supreme in matters of policy, and the consequence of that supremacy is that our duty when interpreting a statute is to ascertain the meaning of the words of the statute duly enacted through the formal legislative process. This limited role serves democratic interests by ensuring that policy is made by elected, politically accountable representatives, not by appointed, life-tenured judges."

Democratically appointed judges, on the other hand, have found that the canons of statutory construction require the opposite result. According to Senior Circuit Judge Andre M. Davis of the Fourth Circuit, for instance, the challengers' reading of the law "has no legislative history to support it," "runs counter to the act's text, structure, and goals," and "renders the entire Congressional scheme nonsensical." To Senior Circuit Judge Harry Edwards of the D.C. Circuit, the challengers' "incentive story is a fiction, a post hoc narrative concocted to provide a colorable explanation for the otherwise risible notion that Congress would have wanted insurance markets to collapse in States that elected not to create their own Exchanges."

The central metaphor of the last major Obamacare challenge revolved around broccoli: If Congress can force us to buy health insurance, could not it also force us to buy broccoli?

The central metaphor of King will revolve instead around pizza. Judge Davis concisely summarized the Democratic perspective on the case this way: "If I ask for pizza from Pizza Hut for lunch but clarify that I would be fine with a pizza from Domino's, and I then specify that I want ham and pepperoni on my pizza from Pizza Hut, my friend who returns from Domino's with a ham and pepperoni pizza has still complied with a literal construction of my lunch order. That is this case."

Assuming the case does come down to the Chief Justice’s vote, what will he do? Will he save the law a second time, recognizing the damage that the Supreme Court will incur to its credibility as an institution if the Court, voting on strict party lines, destroys Obamacare over what certainly looks like a simple drafting error?

Or will he follow in Judge Griffith's footsteps, avowing that he has no choice but to read the words in a wooden fashion, and that doing so is actually the humblest, most principled action he can take, given the Court's "limited" role in democratic government?

At his confirmation hearings, Chief Justice Roberts famously likened a justice's role to that of the neutral umpire, merely calling balls and strikes--a claim that many found unrealistic and hard to credit. For better or for worse, I suspect that Roberts, adopting that posture, will follow Judge Griffith’s example, voting to blow up Obamacare while asserting that he was forced to do so by his commitment to passivity and minimalism.

]]>http://fortune.com/2014/11/10/supreme-courts-new-obamacare-case/feed/0us supreme courtrparloff2013Supreme Court takes on battle over Amazon warehouse payhttp://fortune.com/2014/10/07/supreme-court-amazon-warehouse-workers/
http://fortune.com/2014/10/07/supreme-court-amazon-warehouse-workers/#commentsTue, 07 Oct 2014 16:35:29 +0000http://fortune.com/?p=811338]]>In what’s set to be a showdown of employee theft versus worker rights, the U.S. Supreme Court on Wednesday will hear arguments in a war between workers and warehousing firm Integrity Staffing Solutions, which provides storage and order fulfillment services for companies like Amazon.

The oral argument will address whether former Integrity employees who worked in an Amazon AMZN warehouse in Nevada should be paid for the time they spent waiting to pass through metal detectors after their shifts. The case stems from a class action lawsuit filed in 2010 that argued that these workers deserve back pay for the 10 to 15 minutes per day they spent in line for security checks aimed at reducing employee theft.

Integrity, which will be represented by powerhouse lawyer Paul Clement of the Bancroft firm, argues that the security screenings are like other tasks, such as waiting to punch the clock or walking to or from the workplace, that are not deserving of compensation under the Fair Labor Standards Act.

The FLSA, first passed in 1938, guarantees that workers receive minimum wage and overtime pay. And since 1947--thanks to an amendment known as the Portal-to-Portal Act that followed a 1946 Supreme Court decision--the law has also specified that workers can only be paid for activities that benefit the employer.

The Portal-to-Portal Act prohibits pay for "activities which are preliminary to or post-liminary to [a worker's] principal activity or activities" and time workers spend getting to and from the place where they’ll perform that “principal activity.” Tasks that fall into a gray area have become the subject of Supreme Court cases. Last term, for instance, the nation's top court determined that workers did not deserve pay for time spent donning special uniforms.

The Integrity case wound up before the Supreme Court following an April 2013 decision by the Ninth Circuit Court of Appeals that sided with the workers. The appeals court found that "the security clearances are necessary to employees' primary work as warehouse employees" and that the checks are "done for [Integrity's] benefit."

In its appeal of that decision on Wednesday, Integrity will get a boost from the U.S. government, which filed an amicus brief supporting the contractor and will have a chance to voice its argument before the court.

In its amicus brief, the government argued that workers should not be paid for their security line time because the post-shift screenings are not integral and indispensable to the work performed by the warehouse employees. The "exit screenings are similar to a requirement that an employee check out after a shift has ended," the government said, and the post-liminary task of checking out or waiting in line to do so is non-compensable under federal regulations. "The extra scrutiny associated with having a guard, as part of the process of the employee's departure from the premises, look into an employee's bag or look at items removed from the employee's pockets does not fundamentally change the nature of the checking out process," according to the brief.

The Supreme Court's decision in the case could have implications that go far beyond the former Integrity workers. An amicus brief by the Retail Litigation Center, an organization that advocates for retail companies, and the Chamber of Commerce says that the Ninth Circuit’s decision in 2013 in favor of the workers prompted other Amazon workers to launch legal challenges to security lines and led employees of companies like CVS, Apple, and TJX to file copycat lawsuits seeking hundreds of millions of dollars from employers. The group has asked the Supreme Court to overturn the Ninth Circuit’s decision, which they claim has “created legal uncertainty and enormous potential financial liability for thousands of employers.”

]]>http://fortune.com/2014/10/07/supreme-court-amazon-warehouse-workers/feed/0Inside An Amazon.com Distribution Center On Cyber MondayclairezillmanSupreme Court denies gay marriage appealshttp://fortune.com/2014/10/06/supreme-court-gay-marriage-appeal/
http://fortune.com/2014/10/06/supreme-court-gay-marriage-appeal/#commentsMon, 06 Oct 2014 14:31:51 +0000http://fortune.com/?p=810198]]>This post is in partnership with Time. The article below was originally published at Time.com

By AP/Mark Sherman

(WASHINGTON) -- The Supreme Court turned away appeals Monday from five states seeking to prohibit same-sex marriages, paving the way for an immediate expansion of gay and lesbian unions.

The justices on Monday did not comment in rejecting appeals from Indiana, Oklahoma, Utah, Virginia and Wisconsin. No other state cases were currently pending with the high court, but the justices stopped short of resolving for now the question of same-sex marriage nationwide.

The court's order immediately ends delays on marriage in those states. Couples in six other states -- Colorado, Kansas, North Carolina, South Carolina, West Virginia and Wyoming -- should be able to get married in short order. Those states would be bound by the same appellate rulings that were put on hold pending the Supreme Court's review.

That would make same-sex marriage legal in 30 states and the District of Columbia.

Experts and advocates on both sides of the issue believed the justices would step in and decide gay marriage cases this term.

The justices have an obligation to settle an issue of such national importance, not abdicate that responsibility to lower court judges, the advocates said. Opting out of hearing the cases leaves those lower court rulings in place.

Two other appeals courts, in Cincinnati and San Francisco, could issue decisions any time in same-sex marriage cases. Judges in the Cincinnati-based 6th Circuit who are weighing pro-gay marriage rulings in Kentucky, Michigan, Ohio and Tennessee, appeared more likely to rule in favor of state bans than did the 9th Circuit judges in San Francisco, who are considering Idaho and Nevada restrictions on marriage.

It takes just four of the nine justices to vote to hear a case, but it takes a majority of at least five for an eventual ruling. Monday's opaque order did not indicate how the justices voted on whether to hear the appeals.

]]>http://fortune.com/2014/10/06/supreme-court-gay-marriage-appeal/feed/0us supreme courthuddlestontomU.S. court finds Arab Bank liable for supporting terrorismhttp://fortune.com/2014/09/22/u-s-court-finds-arab-bank-liable-for-supporting-terrorism/
http://fortune.com/2014/09/22/u-s-court-finds-arab-bank-liable-for-supporting-terrorism/#commentsMon, 22 Sep 2014 22:08:45 +0000http://fortune.com/?p=796059]]>A federal jury found on Monday that Arab Bank was liable for supporting terrorist efforts connected with Hamas. Earlier in July, Fortune reported on the U.S. Supreme Court’s refusal to hear an appeal by the bank, which is Jordan’s largest financial institution.

The suit was brought by the families of over 300 Americans killed or injured in 24 attacks in the Middle East, including in Israel, Gaza and the West Bank. According to a release, the jury was presented with “evidence that Arab Bank transferred more than $30 million dollars to Hamas-controlled institutions in the Gaza Strip and West Bank.”

The case has been called the first civil terror finance trial against a financial institution under the Anti-Terrorism Act.

The Middle Eastern bank has $46 billion in assets, according to The New York Times. The bank says that any transactions made for terrorist clients were erroneous.

Michael Elsner, an anti-terrorism and human rights attorney who represents plaintiffs in the case called the decision a “historic day for the banking industry.” He added: “This jury's verdict should be a wake-up call to all financial institutions that they cannot hide behind software systems and internal policies as an excuse to knowingly permit the financing of terrorism.”

The verdict could have a wide-ranging effect on similar legal actions taken on banks and other financial institutions in the future, finding them responsible for the actions of their clients.

The action was first filed in 2004. The trial in Brooklyn’s Federal District Court lasted five weeks.

There will be a separate hearing to determine damages, according to The New York Times.

]]>http://fortune.com/2014/09/22/u-s-court-finds-arab-bank-liable-for-supporting-terrorism/feed/0International Icon ThumbnailsnyderfortuneSupreme Court ace challenges America’s highest minimum wagehttp://fortune.com/2014/08/14/paul-clement-minimum-wage-seattle-supreme-court/
http://fortune.com/2014/08/14/paul-clement-minimum-wage-seattle-supreme-court/#commentsThu, 14 Aug 2014 14:37:13 +0000http://fortune.com/?p=769999]]>When Seattle’s $15 per hour minimum wage became law in early June, Mayor Ed Murray received praise for brokering discussions between labor and business that gave the city the nation’s highest pay without an all-out fight. But implementing the law as it currently stands won’t be easy, especially considering the attorney who’s now challenging it.

Shortly after Murray signed the ordinance into law, lawyer Paul Clement sued the city of Seattle on behalf of the International Franchise Association, which claimed that the $15 per hour law will irreparably harm franchisees and put them at a competitive disadvantage. The lawsuit, which was filed in Seattle federal court, takes aim at the provision of the minimum wage law that treats hotel and fast food franchises differently than other small, local businesses simply because they're associated with big corporations. As it stands now, franchisees must adopt the $15 minimum wage within three years--the same time frame required of large employers. Other small businesses, meanwhile, have seven years to reach the $15 per hour threshold.

In a motion for preliminary injunction that Clement filed earlier this month, he argues that the ordinance violates the interstate commerce clause of the Constitution and the equal protection clause of the Fourteenth Amendment. Its "discriminatory" nature, the filing says, "crosses the constitutional line."

Those are potent claims that carry even more weight considering it’s Clement who lodged them. In an era of high stakes Supreme Court showdowns that have pitted conservative values against liberal beliefs, the Washington, D.C. attorney has served as the right wing’s ace, its heavy hitter, its constitutional wunderkind.

Forty-eight-year-old Clement has argued 74 cases before the nation’s highest court, including two of the most prominent cases from the most recent term. He represented craft store chain Hobby Lobby in its battle against the Affordable Care Act’s contraception coverage mandate and advised television broadcasters in their fight against streaming startup Aereo, notching wins in both. In 2012, he argued against the government in its challenge to Arizona’s controversial immigration law and represented the 26 states that tried to overturn the centerpiece of the health care law. He lost those two cases, as well as a 2013 case in which he argued on behalf of proponents of the Defense of Marriage Act.

The case against Seattle isn’t blatantly partisan, but the constitutional questions it raises were ripe enough to entice Clement, who once served as President George W. Bush’s solicitor general. Clement talked with Fortune on Wednesday about the case, its merits, and why he decided to take it on. The following is an edited transcript of the conversation.

Fortune: From your perspective, what’s at stake in the Seattle minimum wage case?

Paul Clement: Seattle’s minimum wage law is unusual because it sets up differential treatment of small businesses and large businesses. It takes a small business with only a dozen employees that happens to be an Arby’s or McDonald’s and treats it as if it is a de facto large business and requires it to phase in [the $15 minimum wage] on the accelerated timetable that Seattle, in its wisdom, deemed feasible for a company like Boeing, but not for other small businesses. That's problematic because it discriminates against franchises because of their connection to interstate commerce and their affiliation with federal trademarks.

And your lawsuit says the Seattle law violates franchises’ First Amendment rights. Can you explain that?

The basis for treating these franchise businesses differently and less favorably is based on a franchised business’s joint marketing and joint advertising efforts. And of course marketing and advertising is speech.

Just to be clear, your client is not against paying employees $15 per hour, it’s just opposed to the way in which the pay hike will be implemented?

Yes. The most important thing to understand is that, although Seattle is in the headlines because this law gives them the highest minimum age in the land, the legal challenge is not over the simple fact that they raised the minimum wage above the national standard; the lawsuit really focuses in on the discriminatory treatment of franchise businesses.

Critics of your lawsuit say that it’s a front for giant fast food corporations’ opposition to higher worker pay. How do you respond to that?

I think that that points to the issue that's at the heart of this case: corporate separateness. When you walk into a McDonald’s or Days Inn or coffee shop that has a dozen outlets, you're not walking into corporate headquarters. These franchised companies are organized differently from a company that's one monolithic company with one set of management and one set of employees.

No, I don't think it changes anything, though it does show that there's a coordinated campaign to go after the franchise model. I’m not suggesting that my clients think that the NLRB decision is correct, but there at least you have a general standard that the NLBR says applies in certain situations for when you lump employers together. The Seattle approach doesn’t even apply a general test; they’re just applying a categorical rule that franchises get lumped together.

That “coordinated campaign” against franchises that you mention--what forces are behind that and why is it happening now?

There's a coordinated effort out there by unions to try to go after the franchise model. I don't have any particularly great insights into why now and what their motivation is other than they see it as an opportunity. When any given law is passed, there are often allusions made to the “powers” behind it, but with Seattle’s minimum wage law, the wolf comes as a wolf. There's no question where the motivation for this ordinance has come from. To make matters as clear as possible, the Service Employees International Union has actually filed a motion to intervene in the lawsuit to defend the constitutionality of the ordinance. They've taken ownership of the law to the point where they take the position, "we want to intervene here to defend our handiwork."

Your lawsuit references private emails and public statements by elected officials that you claim illustrate an effort to use the minimum wage law to break the franchise model. In one instance, a member of the city council says that “to be a franchisee, you have to be very, very wealthy. Just a small business person of color from Rainier Beach is not going to be able to afford to open a franchise outlet.” How do you respond to that criticism?

Those claims aren't going to be directly relevant to our lawsuit, but I think my clients would love the opportunity to put on that case because, in reality, the facts are just the opposite. The franchise model lowers the cost of forming a new business. Sure, you're going to have to pay some franchise fees, but in exchange you don't have to start from ground zero in terms of establishing familiarity with the brand.

There are many other states and cities considering minimum wage hikes and many that have already implemented them. Does this lawsuit have ramifications beyond the city of Seattle?

For other jurisdictions looking to increase the minimum age in a non-discriminatory way, this lawsuit won't have any impact. But for jurisdictions--and I think Chicago is one--that are using Seattle’s legislation as a model for their own, that want to borrow not only the $15 wage but the discriminatory provisions as well, then this lawsuit would have direct implications for them.

Why did you decide to take this case?

My firm had been doing some consulting work for IFA, so when Seattle’s ordinance was passed, it was natural to think about getting involved. The constitutional issues here are very interesting. The way in which Seattle used federal trademarks and the like as the marks of unfavorable treatment, for me, raises a host of constitutional issues, so it's a great case to get involved in.

The outcomes of some of your past cases have had big social ramifications. Is that true for this case too?

I don't think so. I sort of view this in a different category. There's obviously lots of latitude for states and local governments to engage in economic legislation, but there also are some lines that you can't cross. When you start discriminating against people based on their connections to interstate commerce or their use of intellectual property rights--those are things that start to cross the constitutional line.

]]>http://fortune.com/2014/08/14/paul-clement-minimum-wage-seattle-supreme-court/feed/0lawyer Paul ClementclairezillmanJudge says Aereo ‘jumped the gun’ with emergency motion to be deemed a cable companyhttp://fortune.com/2014/08/01/aereo-emergency-motion-cable/
http://fortune.com/2014/08/01/aereo-emergency-motion-cable/#commentsFri, 01 Aug 2014 19:26:07 +0000http://fortune.com/?p=762901]]>A federal judge waived off an emergency motion from Aereo, as the TV-streaming service fights to be officially designated as a cable company following a U.S. Supreme Court ruling in May that said its services violate the Copyright Act.

Aereo, which suspended its streaming operations after the Supreme Court’s ruling, reportedly told the court Thursday that it is currently “bleeding to death” as it sits in limbo. The company was told by the U.S. Copyright Office last month that it is not a cable company, ruling that retransmitting broadcast networks’ content over the internet does not qualify Aereo for the type of copyright license that is available to cable companies. However, the Copyright Office also said at the time that it would not take action until U.S. courts had clarified Aereo’s status.

On Thursday, a federal appeals court refused to grant Aereo an injunction to determine whether or not the company could be licensed as a cable system and Aereo quickly filed an emergency request to force an expedited decision on its status. But, federal judge Alison Nathan struck that emergency motion from the record on Friday, claiming that Aereo “has jumped the gun in filing, without authorization, its motion for emergency consideration of preliminary injunction issues upon remand,” according to a court filing.

According to Bloomberg, in a filing that has since been stricken from court record, Aereo had told the court: “Unless it is able to resume operations in the immediate future, the company will likely not survive.”

]]>http://fortune.com/2014/08/01/aereo-emergency-motion-cable/feed/0Aereo.comhuddlestontomAereo isn’t a cable company, U.S. Copyright Office sayshttp://fortune.com/2014/07/17/aereo-isnt-a-cable-company-u-s-copyright-office-says/
http://fortune.com/2014/07/17/aereo-isnt-a-cable-company-u-s-copyright-office-says/#commentsThu, 17 Jul 2014 15:13:06 +0000http://fortune.com/?p=748172]]>The U.S. copyright office has told Aereo it’s not a cable company, at least not under the terms of copyright law, according to a letter officials sent the company.

Aereo has been seeking designation as a cable company after losing a Supreme Court case last month that deemed its TV-streaming service illegal. The company wants to obtain the same license available to other cable companies to rebroadcast television programs in exchange for set fees.

Copyright officials aren’t buying the change. The “internet retransmissions of broadcast television fall outside the scope of the Section 111 license,” they said in a letter dated July 16 obtained by CNBC.

Section 111 of the Copyright Act gives the office oversight of the licensing fees paid to cable companies for the retransmission of copyrighted works.

Aereo’s filings would not be rejected, yet. The copyright office said it would accept the company’s application provisionally since its case is still before the courts.

But, Aereo came back Wednesday with a letter filed to a New York district court saying that it now considers itself a cable provider, pointing to the language used in the Supreme Court ruling.

In its decision, the U.S.’s highest court said Aereo is “substantially similar to” and “is for all practical purposes a traditional cable system.”

As a cable provider, Aereo is then entitled to the standard copyright protections given to all cable companies that pay royalty fees, as long as it can secure a license.

Therefore, the company says, it should not have to stop its live streaming service, which it has only done as a courtesy since no injunction was put in place, according to the court letter.

By identifying as a cable provider -- and not a provider of technology equipment as the lower courts had ruled -- Aereo is trying to use the Supreme Court decision to its advantage.

CEO Chet Kanojia, who has been rallying popular support through a petition to lawmakers on Protectmyantenna.org, addressed Aereo supporters on the company’s blog Wednesday after submitting the court letter.

“With this most recent decision and in the spirit of remaining in compliance,” Kanojia wrote. “We chose to pause our operations last week as we consulted with the lower court to map out our next steps.”

The plaintiffs, led by ABC, CBS, NBC and Fox, believe Aereo’s appeal has no merit because of the company’s past statements that denied it was a cable provider.

Even if the New York court doesn’t go along with the cable-provider definition for Aereo, any injunction could be limited since the Supreme Court said “Aereo only publicly performs when its technology allows near simultaneous transmission.”

That could open the door for Aereo to re-configure its service to allow users to playback television shows after the initial broadcast.

]]>http://fortune.com/2014/07/10/aereo-is-aiming-to-reinvent-itself-as-a-cable-company/feed/0Aereo.comlorenzettifortuneHobby Lobby ruling: Why it won’t (further) shrink health coveragehttp://fortune.com/2014/07/01/supreme-courts-hobby-lobby-ruling-why-it-wont-further-shrink-health-coverage/
http://fortune.com/2014/07/01/supreme-courts-hobby-lobby-ruling-why-it-wont-further-shrink-health-coverage/#commentsTue, 01 Jul 2014 17:38:19 +0000http://fortune.com/?p=734791]]>In the Supreme Court's ruling of Burwell v. Hobby on Monday, the fact that it is being called narrow has little to do with the fact that it applies only to closely held corporations.

Ninety percent of U.S. companies are considered closely held, according to a recent study by the Copenhagen Business School. A report from New York University found that these companies account for 52% of private employees and 51% of the private sector's output.

So it would seem that companies throughout the land would be eligible for exemptions as a result of Monday's ruling. But truthfully, that is not the case.

The reason Hobby Lobby's ruling is narrow in application is because of another set of safeguards that the law had already been put in place. These safeguards are known as strict scrutiny jurisprudence, and they are the reason the Hobby Lobby ruling isn't really sweeping at all.

In the decision, the justices held that closely held corporations cannot be required to provide certain contraception services in health plans offered to employees on the grounds that doing so would violate owner's particular Christian beliefs. The Religious Freedom Restoration Act applies to closely held corporations, and the government has failed to show that the mandate is the least restrictive means of advancing its interest in guaranteeing cost-free access to birth control.

Many fear this decision will open the door to all types of companies denying their employees all types of coverage in the name of religious freedom. But that's not going to happen. Here's why:

The Religious Freedom Restoration Act has been the law for the past 21 years. Even before RFRA reinstated strict scrutiny for federal statutes, strict scrutiny had been the law since 1963. Hobby Lobby is the first corporation to win this kind of lawsuit not because the Oklahoma City-based retail arts and crafts chain store is brilliantly evil and found a new loophole to take advantage of. It is simply because Hobby Lobby is the first to pass the test.

For a corporation (even a small and closely held one) to get an exemption, it must first establish the court's satisfaction that it has a sincerely held religious belief that would conflict with the statute.

Second, even a sincerely held religious belief will not be automatically given an exemption. The law still requires the corporation to prove that not having the exemption creates a substantial burden on their belief system.

Third, even if the corporation demonstrates that it is substantially burdened by a federal statute that runs counter to its sincerely held religious belief, it still will not get an exemption if the statute in question is furthering a compelling government interest and there is no other way.

The Hobby Lobby ruling is narrow. Forget the fact that the applicant would have to be a closely-held corporation. In order for a company to even be considered for a Hobby Lobby-type exemption, the company would need to demonstrate that it has a sincerely held (i.e. non-opportunistic) religious belief (how many companies really do?), that is being substantially burdened by a federal statute.

If that happens, the Court will determine if the interest the statute is promoting is a compelling government interest. If the government decides that its interest is not that important, then the company will be given an exemption. The chances are though that where the interest is not that important very few people will actually have any reason to care, so let's move on.

If the government decides that its interest is important, then the court will ask if there is a way to further that interest without restricting religious freedom. If there is, the company will be given an exemption. For example, if a company, like Hobby Lobby, has a problem paying for certain kinds of contraception, the Court will ask if there is a way to get the employees their entitlement without having the company violate its beliefs. If there is, like in Hobby Lobby, a way to do this (insurance companies or the government can cover the cost) will be granted and the interest will still be protected.

Finally, if there is no way to further that compelling interest other than restricting the religious liberty, the company will lose, plain and simple. The law does not allow for religion to trump in these cases.

At the end of the day, the type of exemption Hobby Lobby got is only available after all to a small sub-section of closely held corporations, the ones that deserve and always have deserved to have special carve-outs under the law, carve-outs that do not harm anyone else or stand in the way of any compelling government interest.

Even before the Religious Freedom Restoration Act reinstituted strict scrutiny statutorily in 1993, it had been the federal standard in religion cases from 1963 to 1990. All Hobby Lobby did was reaffirm that it is in fact a good test, that the Court knows how to balance interests properly, and that occasionally, once every 50 years or so, a deserving group will get an exemption.

Mark Goldfeder, Senior Lecturer at Emory University School of Law and a Senior Fellow at the Center for the Study of Law and Religion at Emory University.

]]>http://fortune.com/2014/07/01/supreme-courts-hobby-lobby-ruling-why-it-wont-further-shrink-health-coverage/feed/0Supreme Court Hobby Lobbynt2192Hobby Lobby Supreme Court ruling: Paving the way for gay rights losses?http://fortune.com/2014/06/30/hobby-lobby-religious-freedom-corporations/
http://fortune.com/2014/06/30/hobby-lobby-religious-freedom-corporations/#commentsMon, 30 Jun 2014 17:50:58 +0000http://fortune.com/?p=734082]]>In arguably the most anticipated Supreme Court decision of this term, the nation's top court ruled 5-4 on Monday that family-owned corporations could not be forced to provide employees with insurance coverage for birth control, on the grounds that it violated federally protected religious freedom.

In writing for the court, Justice Samuel Alito ruled that the federal law protecting religious freedom could be applied to for-profit corporations whose owners abide by closely held religious principles. He also ruled that asking such corporations to provide employees with access to birth control imposed a substantial burden on companies that held devout anti-contraception and abortion beliefs. The government, he wrote, could provide coverage of contraception in other ways.

In siding with Hobby Lobby and Conestoga, the Supreme Court could open the doors for other employers to cite their religious freedoms as the basis for opposing, say, laws that prohibit discrimination against gay people. But in writing his majority opinion, Justice Alito appeared to try to construct the decision narrowly to avoid just that. Using racial discrimination as an example, he wrote that the Religious Freedom Restoration Act that Hobby Lobby used as the basis for its argument couldn't be used to shield "discrimination in hiring" as a "religious practice to escape legal sanction." In a concurring decision, Justice Anthony Kennedy emphasized that the decision shouldn't be applied beyond the birth control issue.

Though the conservative justices appear on the surface to guard against Justice Ginsburg’s slippery slope argument, they didn’t go far enough, says Carl Esbeck, a professor at The University of Missouri School of Law, who filed an amicus brief in favor of Hobby Lobby for the National Association of Evangelicals. "They chose to talk about race instead of the 800-pound gorilla in the room: LGBT rights," Esbeck told Fortune. By not addressing LGBT rights explicitly, there's no real resolution to the issue. "It'll be ruled on in the future," Esbeck says.

Emily Martin, vice president and general counsel of the National Women's Law Center, said that Justice Kennedy and Alito's statements that the majority opinion wouldn't lead to employers protesting other medical procedures or discrimination on religious grounds seemed unfounded. "The court does say those things and is apparently trying to suggest that this is a narrow ruling, but the majority doesn't explain why contraception is different," she says, "unless their reasoning is that women's health is less important."

Yet Kevin Walsh, professor at the University of Richmond School of Law who filed a brief in support of Hobby Lobby for 11 Republican senators, points out that the Religious Freedom Restoration Act has been on the books for 20 years and no one has ever used it to argue against anti-discrimination laws. "It's difficult to see how this ruling would prompt businesses to start bringing those claims," he says.

]]>http://fortune.com/2014/06/30/hobby-lobby-religious-freedom-corporations/feed/0Hobby LobbyclairezillmanSupreme Court delivers blow to public unionshttp://fortune.com/2014/06/30/supreme-court-public-unions/
http://fortune.com/2014/06/30/supreme-court-public-unions/#commentsMon, 30 Jun 2014 15:54:02 +0000http://fortune.com/?p=733920]]>Public unions dodged what could have been a lethal bullet on Monday in what's been touted as the most important labor case the Supreme Court has considered in decades.

The Justices decided in a 5-4 ruling on Monday to not overturn a 37-year precedent that allows public unions to collect dues from non-members. But the nation's top court did recognize a category of "partial public employees" that cannot be forced to contribute union fees, which will limit unions’ ability to represent a fast-growing pool of potential members: home care aides.

The decision had the potential to be a death knell for unions, which are already struggling to maintain membership rolls. Union membership in the U.S. stands at 11.3%, down from 20.1% in 1983, according to the Bureau of Labor Statistics. The one relatively healthy sector for unions--the public sphere, where 35.3% of the workforce is unionized--was put at serious risk in the case decided Monday.

The case grew out of a law passed in Illinois in 2003 that recognized some home care providers as public employees and selected a Midwest branch of the SEIU to exclusively represent these workers.

The law held that no home care workers would be compelled to join the SEIU but that all workers would be required to contribute "fair share" dues to the union since the law directed the SEIU to collectively bargain on behalf of all the workers covered by the law regardless of whether the workers wanted the representation.

The Illinois law relied a 1977 decision by the Supreme Court in Abood v. Detroit Board of Education that said that states could require employees to pay partial union dues to cover the cost of unions bargaining on their behalf.

The lead plaintiff in the case, Pamela Harris, worked as a home care aid and was represented by the conservative National Right to Work Legal Defense Foundation, which aimed to upset the Illinois law and the Abood decision with a class action suit. Harris claimed that Illinois was infringing on her first amendment rights since the money that the SEIU automatically subtracted from her paycheck constituted compelled speech in support of the union.

Unions, meanwhile, argued that the required dues prevents freeloaders--those who enjoy the benefits of union representation without having to pay for it.

"This case represents a very, very aggressive attempt by the National Right to Work Foundation to try to make America a right-to-work country in which public unions can never compel dues from people," Lee Adler of Cornell's Industrial and Labor Relations School told Fortune. And history has shown that many workers choose to avoid paying union dues if they are given the option, meaning that a decision overturning Abood could have crippled public unions.

But those fears weren't wholly realized on Monday. In writing for the majority and siding with the home care aides, Justice Samuel Alito, a conservative, kept Abood in place while ruling that personal home-care employees couldn't be forced to pay union dues because they are not technically full-time state employees. “Abood involved full-fledged public employees, but in this case, the status of personal assistants is much different,” Justice Alito said in his opinion.

While the decision didn’t mark as big a blow to unions as it could have, it has hit labor where it hurts. Personal care aides help elderly or disabled clients with everyday tasks and are paid through Medicaid. It's a low paid profession--about $20,000 annually--that's expected to grow by 580,000 workers by 2022 as the nation's population ages, according to the BLS. The field is ripe for unionization and labor has tried--and succeeded--to organize workers in several states.

“Other states have decided like Illinois to share the control over the workers, so this decision has the potential to impact those other programs,” says Cathy Ruckelshaus, general counsel for the National Employment Law Project. A decision against the unionization of these workers will trickle through the elderly and disabled care system, which already has a shortage for workers since working conditions are so poor. "It's a blow not just to the individual workers,” she said, “but also to the care and service provided to the recipients."

The complicated, unanimous decision written by Justice Stephen Breyer essentially gives the president recess appointment power only when the Senate is formally adjourned, but does not apply during the chamber's so-called pro-forma sessions, when no official business is being conducted but the Senate is not officially in recess.

Noel Canning v. National Labor Relations Board, which prompted the Supreme Court decision, challenged President Barack Obama's appointment of three National Labor Relations Board members during a brief Senate break in 2012. The ruling found that President Obama overstepped his authority in making the those appointments, and it invalidates the hundreds of decisions made by the subsequent board from January 2012 through July 2013 because nullifying the appointments of three of the members on the board at that time takes away the quorum the five-member board needs to decide any case.

And it just so happens that during that time frame, the NLRB handed down starkly pro-employee decisions that its current members must now reassess.

Most notably, the board decided that Costco's COST electronic communications policy, which banned employees from publishing social media posts that "damage the company, defame any individual or damage any person’s reputation,” unlawfully restricted employees’ protected rights. The decision protected workers from being fired for badmouthing their employers on sites like Facebook FB.

Another NLRB ruling in a case involving Banner Health Systems banned employers from demanding that a worker who is the subject of an internal investigation refrain from discussing the inquiry with his or her colleagues. That sort of confidentiality requirement had been typical in, say, investigations into allegations of sexual harassment, says Daniel Johns, an attorney who represents employers in labor and employment disputes for law firm Ballard Spahr. And the NLRB's ruling in Banner Health "reversed a 30-year precedent," says Joel Barras, a labor and employment lawyer at Reed Smith.

The 2012 board also issued decisions that have been interpreted as union-friendly, including a decision related to a Gannet-owned television station in Cleveland in which the NLRB determined that an employer is required to deduct union dues from employees' paychecks even after a union contract expires.

The NLRB, whose job it is to conduct union elections and address unfair labor practices, has "issued a number of decisions that are exceedingly favorable to unions and employees," Barras says.

So, does Thursday's decision mean that those pro-employee decisions will be undone for good?

Not necessarily. In 2013, the Senate approved five new NLRB members following a deal in which Senate Republicans agreed not to filibuster executive branch nominees in return for White House nominations of two Republican picks to the board.

Even with the Republican members, however, the overall makeup of the board is still decidedly pro-labor, so there's a good chance that even though the new board must rehear the cases from 2012 and early 2013, the ultimate outcomes may not be different.

But until that happens, those far-reaching employee-friendly decisions are null and void. "As we sit here today," Johns says, "they're no longer in effect."